Wednesday, August 15, 2007

Obsessively, relentlessly in your, or some one's, pocket

Des Moines-based MidAmerican Energy says it’s interested in building a natural gas pipeline on the North Slope of Alaska.

David Sokol, MidAmerican chief executive, told Petroluem News that MidAmerican and unnamed partners plan to submit an application to the state this fall.

The deadline for applications is Nov. 30.

In 2004, MidAmerican proposed building a $6.3 billion, 745-mile natural gas pipeline from the North Slope to the border with Canada’s Yukon Territory. The company later withdrew that application[.]
Des moines Register
Awww...ain't that nice.

Here's some more of what the Register didn't tell us:
The only thing that could stand in the way of MidAmerican’s application, [Sokol] said, was if the FBI investigations and indictments of Alaska State and U.S. lawmakers would somehow “circle back to implicate any of the producers. If they do, our concern is the process might negatively impact a gas line project from a timing standpoint.”

Applications for a project to take North Slope gas to Lower 48 markets have to be filed under the Alaska Gasline Inducement Act by Nov. 30. Strongly supported by Alaska Gov. Sarah Palin, AGIA passed at the end of the 2007 legislative session despite intense criticism from the North Slope’s three oil producers and gas owners, BP, ConocoPhillips and ExxonMobil. The three mega-majors, which own controlling interest in the 800-mile trans-Alaska oil pipeline, have indicated it’s imperative they also own controlling interest in a gas line in order to keep project costs down. They say AGIA, as written, won’t work.
So just what is the Alaska Gasline Inducement Act so favored by Republican Governor Palin?

Supposedly it is designed to start "competative" bidding for the construction of a natural gas pipeline from Alaska's North Slope oil fields. But there is a sweetener and this is what undoubtedly drew MidAmerican.
Sec. 43.90.110. Natural gas pipeline project construction inducement. (a)
15 Subject to the limitations of this chapter, a license issued under this chapter entitles the
16 licensee or its designated affiliate to receive
17 (1) subject to appropriation, state matching contributions in the form of
18 reimbursements in a total amount not to exceed $500,000,000,
paid to the licensee
19 during the seven-year period immediately following the date the license is awarded;
20 the payment period may be extended by the commissioners under an amendment or
21 modification of the project plan under AS 43.90.210; a payment under this paragraph
Governor's office Alaska, pdf
And here's another tidbit the Register didn't have room to report, once again from Petroleum News story cited above:
So, what about costs? Gas prices are high now, but what if they drop? Opponents of an independent gas line say the producers will be more concerned about keeping construction costs low because they’ll be shipping gas in the line, whereas a pipeline company such as MidAmerican isn’t going be as worried about cost overruns because it can simply charge a tariff based on whatever the pipeline costs them to build.

So MidAmerican, the utility company obsessively, relentlessly at your service, if this deal goes through recoups part of its contruction costs by a handout from the Alaska state government, then can turn around a jack up our natural gas bill some time in the future.

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